LTC.L Regulatory News (LTC)

13 Nov 2006 07:01

Latchways PLC13 November 2006 LATCHWAYS PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Latchways plc designs, manufactures and sells a complete range of fall protection systems offering continuous protection to individuals working at height. The systems are sold worldwide through a network of trained installers and are used to provide worker safety on applications as diverse as buildings, bridges, aircraft, telecommunications towers, manufacturing plants, entertainment arenas and offshore platforms. Latchways' equipment may be fitted either to new structures or retrofitted to existing ones. Financial Highlights * Group turnover increased by 18% to £16.58 million (2005: £14.10 million)* Operating profit increased by 34% to £4.01 million (2005: £3.01 million)* Profit before tax increased by 36% to £4.10 million (2005: £3.01 million)* Diluted earnings per share increased by 33% to 24.82 pence (2005: 18.62pence)* Net cash position of £5.9 million (2005: £1.7 million)* Interim dividend increased by 54% to 5.92 pence (2005: 3.85 pence)* Special dividend of 30 pence per share (2005: nil) Commenting on the results, the Chairman, Paul Hearson said: "I am pleased to report another strong period of growth for Latchways. The first six months of the year have seen considerable growth across all our operations, continuing the excellent progress made in 2005. The legislative environment in relation to working at height regulations in both the UK and Europe continues to have a positive impact on our business. "There are strong prospects for organic growth across all our divisions. This organic growth is self financing, whilst small acquisitions can be funded without needing to revert to shareholders. As a result, the board has concluded that a prudent return of cash to shareholders is appropriate at this time and is declaring a special dividend of 30p per share. "Our continued investment in the business, together with forthcoming new productdevelopments, give us confidence in our ability to deliver further profitablegrowth going forward." Enquiries: Latchways plc Tel: 01380 732700David Hearson, Chief ExecutiveRex Orton, Financial Director Threadneedle Communications Tel: 020 7531 2620Graham Herring Chairman's Statement I am pleased to report another strong period of growth for Latchways. The firstsix months of the year have seen considerable growth across all our operations,continuing the excellent progress made in 2005. The legislative environment inrelation to working at height regulations in both the UK and mainland Europecontinues to have a positive impact on our business. Results Group Turnover was £16.6 million (2005: £14.1 million), an increase of 18% onthe same period last year. Mainland Europe and the Rest of the World bothdelivered strong growth through our installer network. Both the Safety Servicesand Specialist Fixings divisions delivered further growth, following on from thesignificant increases seen in 2005. Operating profit increased by 34% to £4.01 million (2005: £3.01 million). Profitbefore tax was 36% higher at £4.10 million (2005: £3.01 million). Dilutedearnings per share rose by 33% to 24.82 pence (2005: 18.62 pence). Gross margins increased by 1.4% to 56% (2005: 54.6%). High stainless steelcommodity prices were offset by product mix effects and improved margins in ourservice businesses. The world market for stainless steel continues to tighten,with prices currently at record levels. To date we have been able to offset costincreases through product re-sourcing activities with only modest priceincreases to customers. Net operating expenses increased by 12% in the period. Further investment ininfrastructure and product development is planned as the business expands. Group net cash balances (cash and cash equivalents less bank debt) haveincreased by £1.8 million since the year end from £4.1 million to £5.9 million(2005: £1.7 million). Dividends Latchways has established a strongly cash-generative business which has enabledus to grow our profits as well as generate significant amounts of cash. For thepast five years we have consistently achieved an excellent rate of conversion ofoperating profits to cash. This has enabled us to raise the dividend at aprudent but progressive rate. At the end of the last financial year, weconcluded that the business could sustain a higher level of dividend, andtherefore substantially increased the final dividend. Further to this, the boardhas declared an interim dividend of 5.92 pence (2005: 3.85 pence), a 54%increase on the 2005 interim dividend. It is anticipated that, henceforth, theinterim dividend will represent approximately one-third of the total for theyear. The interim dividend will be payable on 2nd March 2007 to shareholders onthe register as at 2nd February 2007. Furthermore, the board has reviewed its current and medium term cashrequirements. As described above, the business is cash generative which hasenabled us to pay down debt and build cash. Prospects for organic growth acrossour business are strong. This organic growth is self financing, whilst smallacquisitions can be funded without needing to revert to shareholders. As aresult, the board has concluded that a prudent return of cash to shareholders isappropriate at this time. After considering different options, the board hasdecided that this should be in the form of a special dividend of 30 pence perOrdinary Share, thus returning £3.34 million to shareholders. This dividend willbe payable on 11th January 2007 to shareholders on the register as at 14thDecember 2006. In accordance with IAS 10, these dividends are not reflected in these interimaccounts. Review During the period, we have maintained our focus on our core business. Wecontinue to work with our worldwide customer base, our installers and architectsto ensure that we provide quality products and first class customer service.This focus has served us well over the past few years. We remain committed toour strategy of organic growth through focused product development together withniche acquisitions. The UK market has remained strong during the period. The commercial constructionsector is in good health which should underpin our business going forward,whilst the Working at Height Regulations introduced in 2005 have been helpful inproviding further opportunities. Mainland Europe has once again been one of our strongest growth areas. We havebeen building our presence in Germany and our German installers have been makinggood progress during the period. We are confident of growth in this market. North American revenues have increased, driven by improved Wingrip sales. Giventhe lack of legislation in our traditional business, Wingrip demonstrates theimportance of market specific products and we will be launching a range ofproducts in 2007 targeting the North American market. Revenues to the Rest of the World increased significantly in the period. We havewon business in markets with no strong safety tradition, but where recognitionof the need to address fall protection has been increasing. Often such countrieslook to European standards for guidance and this has created opportunities forLatchways. Wingrip has had a strong first half with revenues significantly higher than2005. Latchways is now the specified system of choice for a number of commercialaircraft manufacturers and operators, as well as a number of military customers. The Safety Services and Specialist Fixing divisions have made further progressin the current period on the back of strong performances in 2005. SafetyServices has further enhanced its position as the largest installer of Latchwaysproducts. New Product Innovation New products remain important to the Latchways strategy and we will be launchinga number of innovative products in the coming year. We continue to identifyadditional product ideas, whether developed in-house or through bolt-onacquisitions . This process will continue. Board Changes During the period, James Joll, a non-executive director, resigned from the boardin order to concentrate on his other business interests. James has made asignificant contribution to the board over the past nine years and hisexperience and wisdom will be missed. However, we were delighted to be able toappoint Per Troen as James' successor. An international corporate financelawyer, Per has extensive contacts which will assist us with our strategy ofbroadening our geographic coverage, as well as a strong M&A background. Future Prospects We have enjoyed a particularly strong first half of the year, and with a goodsecond half in prospect we expect to report significant growth for the year as awhole. Our continued investment in the business, together with forthcoming new productdevelopments, give us confidence in our ability to deliver further profitablegrowth going forward. Paul HearsonChairman13 November 2006 Latchways plc Consolidated Income Statement (Unaudited) (Unaudited) (Audited) 6 months to 6 months to Year To 30.09.06 30.09.05 31.03.06 £'000 £'000 £'000 Revenue 16,583 14,101 28,079 Cost of Sales (7,299) (6,404) (12,394)_______________________________________________________________________________ Gross profit 9,284 7,697 15,685 Net operating expenses (5,269) (4,691) (9,506)_______________________________________________________________________________ Operating profit 4,015 3,006 6,179 Interest payable andsimilar charges (48) (71) (140) Interest receivable 134 77 158_______________________________________________________________________________ Profit before taxation 4,101 3,012 6,197 Taxation (1,343) (963) (1,819)_______________________________________________________________________________ Profit for the periodattributable to equity shareholders 2,758 2,049 4,378_______________________________________________________________________________ Earnings per share expressedin pence per share- Basic 25.05 18.84 40.20- Diluted 24.82 18.62 39.79_______________________________________________________________________________ The results for the periods arose wholly from continuing operations. The group had no recognised gains or losses other than those included in theincome statement. Latchways plc Consolidated Balance Sheet (Unaudited) (Unaudited) (Audited) as at as at as at 30.09.06 30.09.05 31.03.06 £'000 £'000 £'000AssetsNon-current assetsGoodwill 2,208 2,208 2,208 Intangible assets 1,267 1,408 1,386 Property, plant and equipment 2,572 2,572 2,537 Deferred income tax assets 65 149 65_______________________________________________________________________________ 6,112 6,337 6,196_______________________________________________________________________________Current assetsInventories 1,925 1,757 2,102Trade and other receivables 6,781 5,829 5,454Financial assets- Derivative financial instruments - 50 -Cash and cash equivalents 6,967 3,448 5,554_______________________________________________________________________________ 15,673 11,084 13,110_______________________________________________________________________________LiabilitiesCurrent liabilitiesFinancial liabilities- Borrowings (652) (652) (652)- Derivative financial instruments - - (28)Trade and other payables (3,161) (3,012) (3,402)Current tax liabilities (1,879) (1,153) (1,205)_______________________________________________________________________________ (5,692) (4,817) (5,287)_______________________________________________________________________________Net current assets 9,981 6,267 7,823_______________________________________________________________________________Non-current liabilitiesFinancial liabilities- Borrowings (439) (1,085) (768)- Derivative financial instruments - (16) -Deferred income tax liabilities (212) (418) (212)_______________________________________________________________________________ (651) (1,519) (980)_______________________________________________________________________________Net assets 15,442 11,085 13,039_______________________________________________________________________________Shareholders' equityOrdinary share capital 556 544 545Share premium 1,780 1,037 1,072Other reserves 171 147 156Retained earnings 12,935 9,357 11,266_______________________________________________________________________________Total shareholders' equity 15,442 11,085 13,039 Latchways plc Consolidated Statement of changes in shareholders' equity Share Share Retained Capital Share Total Capital Premium Earnings Redemption Based Reserves Reserve Payments £'000 £'000 £'000 £'000 £'000 £'000 1 April 2005 544 999 8,098 111 25 9,777 Net Profit - - 2,049 - - 2,049 Share options Proceeds from - 38 - - - 38shares issued Value of employee - - - - 11 11services Dividends - - (790) - - (790)________________________________________________________________________________ At 30 September 544 1,037 9,357 111 36 11,0852005 Net Profit - - 2,329 - - 2,329 Share options Proceeds from 1 35 - - - 36shares issued Value of - - - - 9 9employee services Dividends - - (420) - - (420)________________________________________________________________________________At 31 March 2006 545 1,072 11,266 111 45 13,039 Net Profit - - 2,758 - - 2,758 Share options Proceeds from 11 708 - - - 719shares issued Value of - - - - 15 15employee services Dividends - - (1,089) - - (1,089)________________________________________________________________________________At 30 September 556 1,780 12,935 111 60 15,4422006________________________________________________________________________________ Latchways plc Consolidated Cash Flow Statement (Unaudited) (Unaudited) (Audited) 6 months to 6 months to Year To 30.09.06 30.09.05 31.03.06 £'000 £'000 £'000 Cash flows from operating activitiesCash generated from operations (Note 6) 2,986 4,020 8,013Interest paid (48) (71) (121)Tax paid (744) (581) (1,498)Tax received 75 - -________________________________________________________________________________Net cash from operating activities 2,269 3,368 6,394________________________________________________________________________________Cash flows from investing activitiesInterest received 134 77 148Capital expenditure on property, plant and equipment (185) (206) (359)Capital expenditure on intangible assets (52) (89) (174)Development expenditure capitalised (54) (48) (95)________________________________________________________________________________Net cash used in investing activities (157) (266) (480)________________________________________________________________________________Cash flows from financing activitiesNet proceeds from issue ofordinary share capital 719 38 74Repayment of borrowings (329) (336) (658)Dividends paid to shareholders (1,089) (790) (1,210)________________________________________________________________________________Net cash used in financing activities (699) (1,088) (1,794)________________________________________________________________________________Net increase in cash and cash equivalents 1,413 2,014 4,120Cash and cash equivalents at 1 April 5,554 1,434 1,434________________________________________________________________________________Cash and cash equivalents at end of period 6,967 3,448 5,554________________________________________________________________________________ Notes to the consolidated interim financial statements 1. Financial information and presentation The financial information contained in this Interim Report does not constitute statutory accounts within the meaning of the Companies Act 1985 and has not been audited or reviewed by the Group's auditors. The financial information for the year to 31 March 2006 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. It is extracted from the statutory accounts for that year, on which the Group's auditors PricewaterhouseCoopers LLP gave an unqualified audit report. Statutory accounts for the year ended 31 March 2006 have been delivered to the Registrar of Companies. 2. Basis of preparation These September 2006 interim consolidated financial statements of Latchways are for the six months ended 30 September 2006. They have been prepared in accordance with the accounting policies the group adopted in its 2006 annual report. These accounting policies are based on the EU-adopted International Financial Reporting Standards (IFRS) and IFRIC interpretations that are applicable at this time. The policies set out in the 2006 annual report have been consistently applied to all the periods presented. These consolidated interim financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivative instruments at fair value through the income statement. The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the group's accounting policies. 3. Taxation Taxation is recognised in these interim financial statements based on management's best estimates of the weighted average annual effective tax rate expected for the full year. 4. Dividends An interim dividend of 5.92 pence per share (2005: 3.85 pence), costing £659,000 (2005: £419,000) has been declared and will be paid on 2nd March 2007 to shareholders on the register at 2nd February 2007. Furthermore, a special dividend of 30 pence per share (2005: nil), costing £3,338,000 (2005: £nil) has been declared and will be paid on 11th January 2007 to shareholders on the register as at 14th December 2006. In accordance with IAS 10, these financial statements do not reflect these dividends payable. 5. Earnings per Share Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume exercise of all dilutive share options. The group has only one such category: those share options granted to employees where the exercise price is less than the average market price of the company's ordinary shares during the period. The average market price for the period was £7.68 (2005: £4.41). Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below: 6 months to 30.9.06 6 months to 30.09.05 Earnings Weighted Per share Earnings Weighted Per share average amount average amount number of number of shares shares £'000 Thousand Pence £'000 Thousand Pence Basic EPSEarnings attributed 2,758 11,010 25.05 2,049 10,881 18.84to ordinary shareholders Effect of dilutive 104 (0.23) 122 (0.22)share options________________________________________________________________________________ Diluted EPS 2,758 11,114 24.82 2,049 11,003 18.62 6. Reconciliation of operating profit to cash flow from operations (Unaudited) (Unaudited) (Audited) 6 months to 6 months to Year to 30.09.06 30.09.05 31.03.06 £'000 £'000 £'000 Net profit for the period 2,758 2,049 4,378Taxation 1,343 963 1,819Net interest (received)/paid (86) (6) (18)________________________________________________________________________________Operating profit for the period 4,015 3,006 6,179Adjustments for:Depreciation of property, plant and equipment 150 166 353Amortisation of intangible fixed assets 114 137 246Amortisation of development costs 111 44 86Share option charge 15 11 20________________________________________________________________________________Operating cash flows before movements in 4,405 3,364 6,884working capitalMovement in inventories 177 285 (61)Movement in trade and other receivables (1,327) 958 1,340Movement in trade and other payables (269) (587) (150)________________________________________________________________________________Cash generated by operations 2,986 4,020 8,013 7. Interim Report Copies of this interim report will be sent to all shareholders. Additional copies will be available from the group's registered office at Hopton Park, Devizes, Wiltshire SN10 2JP, or will be available for download from the group's website at www.latchways.com. This information is provided by RNS The company news service from the London Stock Exchange